EU Fines Google 1.49 Billion for Ad Practices

The EU imposed a €1.49 billion fine on Google’s Alphabet Inc. division for anti-competitive practices and for violating antitrust rules with its online advertising business. The Union enacted the measure on March 20.

It is not the first time that European antitrust regulators have fined the firm significant amounts of money. This one is only the third-largest fine Google has had to pay, after sums of €2.4 billion in 2017 and €4.3 billion in 2018 for respectively blocking rivals of shopping comparison websites and for using its Android mobile operating system to block rivals, according to Reuters.

This reinforces the EU’s position as the most severe watchdog of the tech industry, which continues to gain global influence. The European model itself could become global, as more countries confront the expansion of Silicon Valley’s platforms.

EU regulators reproach Google for forcing the websites that use its search bar to display only advertisements served by its Ad Sense for Search product. The EU’s competition commissioner, Margrethe Vestager, explained that “Google has cemented its dominance in online search adverts and shielded itself from competitive pressure by imposing anticompetitive contractual restrictions on third-party websites.” She added that, consequently, advertisers and website owners “had less choice and likely faced higher prices that would be passed on to consumers.” EU antitrust laws prohibit such practices and consider them abusive.

Microsoft, one of the rivals that the advertisement policy had undercut, filed a complaint in 2009. The follow-up investigations only started 7 years later.

Notwithstanding the fact Google stopped the practice in 2016, the European Commissioner for Competition aims to make an example out of Google and thereby discourage other digital giants. The Commission seeks to demonstrate that firms should avoid anti-trust behavior altogether and comply from the start. Indeed, since these firms control such a broad share of the market in the tech industry, these actions can have long-lasting impacts on their smaller rivals.

However, even if the decision will help Google’s competitors, it will change little for Google. The penalties’ effectiveness is ambiguous, the investigations and the overall processes are slow, and, in the meantime, the power of the firms continue to grow. Despite the EU’s announcement of the fine, Alphabet stock rose two percent on Wall Street on the day of the decision.

Nonetheless, the ruling follows a growing global desire to control the influence of big tech enterprises. Even if the fine only applies to Google’s operations within the EU, and even if its impact on the firm is minimal, increased pressure might prompt Google to operate with more transparency.